Heather,

I am graduating law school in May of this year, but I am enrolled in a LL.M. program for the fall.  I have used both Stafford and GradPlus loans for law school and plan on using the same for my LL.M. program.  I plan on working in environmental non-profit when I complete my LL.M.  What should I do to assure that I will be on track for the loan forgiveness programs after I graduate?  I figured I need to let my borrower know that I am continuing my education, but of course I don’t want to mess anything up for loan repayment options!  Please let me know, thanks!

~~Rich

My opinion is that you ought to stick to the federal loans, Stafford and GradPlus, and avoid private student loans. For example, a bar review loan is going to be a commercial loan that won’t be eligible for public service loan forgiveness. Also, it’s generally a good idea to borrow as little as you can, keep good track of your borrowing, and stay in touch with your lenders.  Be aware of filing your income tax return, even if you have little or no income as a student.  That can help you establish your income for purposes of income-based repayment upon graduation.

And if you decide to take any time between school programs, be aware that if you consolidate and start making payments that count towards forgiveness, you must be careful not to reconsolidate after borrowing new loans.  That would likely serve to eliminate your progress towards forgiveness on the first consolidation loan.

Good luck on your LL.M!

2 Quick Followup Questions.

1) I just got my JD but am thinking about going back to school in a few years. If I spend the time between now and then making my payments under PSLF, would I be able to pick these up after I graduate? Then, assuming I had qualifying federal loans related to that degree, would those loans then qualify for their own 10 years of payment?  Almost seems better to just keep going to school so all the loans would expire at the same time.

2) Relating to loans and qualifying PSLF payments. If your payment is going to be capped by your wages, does it make much sense to take out less than the full amount allowed for living expenses? Or to pay things back quicker? I suppose there are things that could make me not do PS work, but that would have to be a pretty outstanding job.

Thanks in advance. Amazing website, and (from reading other forum posts) great answers.

Not educated enough, huh?  Just kidding.

1)  You can pick up making payments towards PSLF where you left off, but beware of one potential pitfall.  The Department of Ed could make it tough (but I’m working on it) for folks who make some payments towards forgiveness on loan A, go back to school and borrow loan B, and then consolidate loan A and loan B into consolidation loan C.  The Dept of Ed might decide that loan A is paid off by loan C and therefore a full 120 payments must be made on loan C before PSLF can be earned.  I have a spiffy counter argument to that that I am hopeful will prevail that I will paste below this answer FYI.

2)  I never recommend that folks borrow more than they need, because who knows what could happen in the future.  Paying debt slowly causes more interest to accrue.  That said, if could somehow predict with certainty that you’d earn forgiveness, it wouldn’t matter, right.  Be careful though, because in my experience shit happens.  You know?  Also read this thread about the possibility of repeal of PSLF: http://askheatherjarvis.com/forums/viewthread/8/

Best,
Heather

Procedures for borrowers who consolidate loans after making qualifying payments
It will sometimes be necessary to consider the underlying loans separately even after consolidation has repaid the original underlying loans.  There will be circumstances in borrowers may earn PSLF on portions of consolidation loans (for example because they made some number of qualifying payments on underlying loans that were later consolidated). In these instances, it will be necessary to consider which portion of the consolidation loan is eligible for PSLF discharge.

There is significant precedent for allowing PSLF on only those portions of consolidation loans that are eligible for discharge.  Although a consolidation loan repays the underlying loans that make up the new consolidation loan, consolidation loans do not always extinguish defenses applicable to the underlying loans.  See Crawford v. American Inst. of Prof’l Career, Inc., (D. Ariz. Feb. 8, 1996), available at http://www.consumerlaw.org/unreported. 

Additionally, there are circumstances in which portions of consolidation loans are eligible for statutory discharge while other portions are not.  In these instances, it is necessary to consider which of the underlying loans are eligible for discharge and which are not

• When consolidation loan borrowers qualify to receive school-related discharges (closed school, false certification, and unpaid monthly refund), only the portion of the consolidation attributable to the discharge-eligible loan will be discharged.  34 C.F.R. § 682.212(d)-(f).
• For joint consolidation loans, if one of the borrowers dies or becomes disabled, the portion of the joint consolidation loan attributable to that borrower’s loans will be discharged.  34 C.F.R. §§ 682.402(a)(2), 685.220(1)(3)(i), (iii). 
• If one joint consolidation loan borrower qualifies for a school-related discharge or for teacher loan forgiveness, the portion of the joint consolidation loan attributable to that borrower’s loans will be discharged.  34 C.F.R. § 685.220(1)(3)(k)(iii).

Oh, and thanks for the compliments!  Please help me help others by spreading the word about my website through your social media channels.  I’d really appreciate it and it will help me succeed with my sponsorship strategy so I can continue providing free services to borrowers.